Knowledge Center

The Bottom Line – Banking on Growth

Banking on Growth

Video: Brian Hoban talks about connections, community, and the commercial lending process

Our Chief Commercial Banking Officer, Brian Hoban, recently sat down to talk about the vision and values that guide his teams to make connections, cultivate relationships and create new opportunities. Watch how Brian came to join Country Club Bank, how he thinks and how he wants his commercial bankers to think when it comes to listening, learning, and lending.

Brian Hoban photo

— Brian Hoban, Chief Commercial Banking Officer

Economic Insights

Inflation cools, but probably not enough to slow down Fed interest rate increases

Inflation edged down slightly to 6.4% in January (5.6% core), with energy, housing, and food still keeping the pressure on consumers.

That’s just under the 6.5% reading in December, according to the Labor Department’s latest data released earlier this month. That is the seventh straight month of reduced inflation since peaking at 9.1% in June 2022, which was the highest reading since 1981.

So, what does this latest round of data mean for interest rates, and where does inflation go from here?

The short answer is that Federal Reserve officials will probably raise interest rates again in March, and are now more likely to signal ongoing increases for the remainder of the year and push Fed funds predictions to the higher side of their ranges – 5.25% to 5.5%.

The longer answer is that we are now on the cusp of the one-year anniversary of the Ukraine War, which was a strong driver of inflation. So, in the short term, inflation likely continues to slow.

However, in the longer term, a new risk on the horizon continues to emerge: developments with China / Taiwan. Taiwan holds a 66% global market share in the semiconductor industry (a key component for many manufactured goods) and another conflict here would likely not be good for inflation.

Complicating the picture further is an unemployment rate at a 53-year low of 3.4%, and the willingness of employers to add more than half a million jobs in the month of January according to a Labor Department release earlier this month. This led to 1.92 job openings for each unemployed individual.

Marcus Scott photo Bottom line: The Federal Reserve will likely continue to raise interest rates this year, which should, coupled with the one-year anniversary of the Ukrainian War, move inflation lower in the short term. A tight labor market and further risks from Taiwan in the long term, could see inflation remain stubbornly above the Federal Reserve’s 2.0% target in the longer term. With inflation and interest rates remaining a key focus for investors in 2023, these factors continue to bare watching as the market has been witnessing strong volatility around these recent data releases. Inflation and Fed policy represent risk to credit and equity markets, causing volatility to remain relatively high.

— Marcus Scott, CFA^®, CFP^®, Chief Investment Officer (CIO) for The Country Club Trust Company

CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it authorizes use of by individuals who successfully complete CFP Board's initial and ongoing certification requirements.

The opinions and views expressed herein are those of the author and do not necessarily reflect those of Country Club Trust Company, a division of Country Club Bank, or any affiliate thereof. Information provided is for illustrative and discussion purposes only; should not be considered a recommendation; and is subject to change. Some information provided above may be obtained from outside sources believed to be reliable, but no representation is made as to its accuracy or completeness. Please note that investments involve risk, and that past performance does not guarantee future results.

Capital Ideas

The State of M&A in Kansas City: CC Capital Advisors releases latest report for the region

CC Capital Advisors had a noteworthy 2022 advising several outstanding companies on nine completed transactions across a number of industries and transaction types. Current economic headwinds pose potential challenges in the coming year, but a variety of factors provide reason for optimism that deals will continue to get done in 2023.

Here are some highlights from The Report:

Kansas City-area companies participated in 274 transactions.
That represents a year-over-year increase of 8.3%.
While deal count was up, total deal valuation was down.
Financial Institutions led the way in volume, with Healthcare/Life Sciences, and Consumer Products finishing second and third, respectively.
Notable transactions included Rx Savings to McKesson for $875 million, Caravan Health to Signify Health for $300 million, and Citizens Bancshares Co. to Southern Bank for $140 million.

Download the complete Report here.

CC Capital Advisors, Inc. Member FINRA, SIPC.

Client Success

Accounting firm Goering & Granatino focuses on culture and new acquisitions to drive steady growth

Amber Goering and Frank Granatino had a vision to create a firm designed by business owners, for business owners. With an emphasis on relationships and value-added outsourced services ranging from bill pay to boardroom presentations, the firm has grown organically, as well as through strategic acquisitions, with two of those financed by Country Club Bank. Founder and partner, Frank Granatino, shares the firm’s growth story and also provides tips on getting the most from your CPA firm, and how to take advantage of new tax code changes that allow for larger state tax deductions.

Amber Goering and Frank Granatino, the principals of Goering & Granatino, P.A., Certified Public Accountants, have a passion for serving business owners because they know what it’s like to have a dream, work tirelessly to make it happen and then grow it into a thriving and self-sustaining business.

Which is why they believe individuals, entrepreneurs, and business owners deserve more than being treated as just another file.

“As business owners ourselves, we understand that owners need professionals who are collaborative and creative, reliable and responsive, and accountable and encouraging,” Granatino said. “And that’s what we strive to deliver day in and day out.”

The approach is working. Since 2015, the firm has grown to 37 staffers, serving hundreds of clients across the region, providing expert guidance on accounting, tax, and business formation, as well as fractional CFO services.

While much of the growth has been organic, the firm has also used strategic acquisitions to gain instant access to new clients and additional employees. Country Club Bank has provided financing for two of the acquisitions.

“We’ve had our personal and business accounts with Country Club Bank since we started our firm, and we’ve always been impressed with the service and professionalism,” Granatino said. “It was a natural fit for us to secure our business acquisition loans with the bank.”

Granatino said underwriting and funding went smoothly and quickly. Valuations, buy-sell agreements and credit checks were reviewed and approved by Country Club Bank teams and timely closings were scheduled.

“They’re experienced, they’re responsive and they’re efficient,” Granatino said. “It’s why we’re with Country Club Bank, it’s why we stay and it’s also why we recommend them to our business clients as often as we can.”

Advice for Working with Your Accounting Firm

Granatino said the most gratifying part of his practice is helping business owners make good decisions. He has this advice for business owners looking to make the most of their accounting firm relationships.

Cultivate close connections and collaboration among all your professional resources. Make sure your accounting firm, law firm, and financial advisory professionals know each other and know your goals and plans.
Be diligent and precise with your accounting controls and practices. Keep records up-to-date and make timely filings for all important documents and payments.
Listen to professional recommendations. Your accounting professionals wouldn’t bring them up if they weren’t important. Heed their advice.

Need to Know: Pass-Through Entity Tax Election

Granatino said one of the most important tax law changes he’s tracking for clients in Kansas and Missouri is the new pass-through entity tax election.

Granatino recommends that a business owner consult his own tax advisor on this issue, but the new rule now allows partnerships and S corporations to make an annual election to pay an entity-level state tax, thereby making state taxes deductible from federal income taxes.

Eligibility, elections and payments should be calculated by a professional, but business owners should be asking if this new rule could benefit them.